"At my own startup, I just tell engineers I'll pay as much as their current company"
I'm curious what exactly you mean by this. Let's say an engineer's current compensation consists of:
- $N cash per year, and
- A single stock grant of shares in a publicly traded company (worth $4N at today's closing price), vesting linearly over 4 years
So the engineer's total annual compensation is worth $2N ($N cash, plus $N worth of stock vesting at the end of the year).
When you say you'll pay as much as her current company (and that she 'will get much more equity'), are you saying you'll match her current liquid compensation (cash plus vesting of marketable securities) or just the cash portion?
If the latter (you're only matching the cash portion) then, even if her compensation has 'strictly better expected value' (based on a coon understanding of the probability distribution of outcomes), she may still prefer to avoid the 95% chance that her new compensation turns out to be worth only half of her current compensation.
I'm curious what exactly you mean by this. Let's say an engineer's current compensation consists of:
- $N cash per year, and
- A single stock grant of shares in a publicly traded company (worth $4N at today's closing price), vesting linearly over 4 years
So the engineer's total annual compensation is worth $2N ($N cash, plus $N worth of stock vesting at the end of the year).
When you say you'll pay as much as her current company (and that she 'will get much more equity'), are you saying you'll match her current liquid compensation (cash plus vesting of marketable securities) or just the cash portion?
If the latter (you're only matching the cash portion) then, even if her compensation has 'strictly better expected value' (based on a coon understanding of the probability distribution of outcomes), she may still prefer to avoid the 95% chance that her new compensation turns out to be worth only half of her current compensation.